The misguided graduate bribe

by Beacon Staff • February 21, 2007

As March approaches, Emerson's seniors are in a state of hyperactivity: completing portraits, editing resumes, polishing cover letters and making final preparations for departure into the so-called real world. Once caps are cheerily tossed into the air and diplomas are in hand, important decisions will need to be made by the Class of 2007.

It is at this point that debts become a harsh reality and high living expenses become important to consider when making choices about where to settle. Meanwhile, Massachusetts legislators are keen to keep recently graduated students in the Boston area.

Efforts are being made to retain new talent in the Bay State to prevent what is commonly referred to as "brain drain." This is a term used to explain what happens when college graduates leave the area in which they studied, bringing their expertise elsewhere for the benefit of another state and their economy.

According to a 2003 study by The Boston Consulting Group, more than half of students who graduate in the greater Boston area leave after graduation, with the number-one reason for departure being the high cost of living.

What's being done about this? Democratic State Senator Brian A. Joyce has an idea. The plan is to give away $10,000 for a down payment on a condo or house to anyone who has graduated from a state college or a similarly acredited program in the last 10 years.

In order to receive this amount, the graduate would have to remain in Massachusetts for at least five years and also make no more then 135 percent of the community's median income. Joyce's initial proposal plans to set aside $25 million dollars and then see how many graduates sign up for the program.

The idea behind the bill, as put by Boston Globe reporter Maria Cramer, is to "soften the blow from the high cost of living and ... persuade some graduates to stay and raise families here."

In a 2006 study on CNNMoney.com, Boston ranked as the third most expensive city in the United States for apartment rental, with an average rent of $1,632 per month.

These costs make it extremely difficult for any young person starting out to establish themselves and makes the struggle to reach economic security even more challenging.

While Joyce's plan to bribe graduates deserves a pat on the back for innovation, it still isn't going to do much good.

No matter how much compensation the government doles out, the issue of high living costs remains completely unsolved.

It's a temporary solution for a long-term problem. Finally, the government giveaways ultimately come out of its residents' pockets in the form of higher taxes.

If Massachusetts continues with these interventionist policies, taxes will remain high, making the area less business-friendly and deterring new businesses from starting up. This will lead to fewer jobs and opportunities for the very graduates those on Beacon Hill want to keep here.

High personal income taxes discourage entrepreneurship and therefore make the area less attractive to people beginning their careers. Ultimately, increasing the government's role in the attempts to make the area more affordable, could wind up having the opposite effect.

Massachusetts should focus on creating a more business friendly environment, which will have greater impact on living affordability for the long term. Other states, such as Vermont, are pushing tax breaks for younger people and the businesses that hire them. Their governor, Jim Douglas, takes a "less government, for more" approach and has suggested tax credits, or scholarships for residents who attend college in the state.

This approach considers the economic repercussions of increased government spending, but also recognizes the importance of helping recent graduates get on their feet. Instead of taking away from the private sector and increasing the individuals' dependance on government, tax-cut incentives reduce dependance on government.

It also allows students to use their saved money however they see fit, rather then be required to use it only for the down payment on a condo or house.

While the money being thrown in the direction of graduates may be enticing, Massachusetts needs to rethink its economic policies in order to create a sustainable solution to the Boston brain drain.